Over-valuing Immigrants

This above-linked editorial appeared on Reuters a couple of days ago. The topic of immigration “reform” (liberalization) has picked up a lot of steam since President Obama’s re-election, as Republicans have concluded that they need to out-do Democratic pandering to the Latino demographic (which both parties have stereotyped as valuing the importation of more Latinos over the interests of their newly adopted home) as their pathway back to the white house. (By the way, I wonder how many Latinos are actually fooled into thinking that this push for immigration reform will actually benefit Latinos instead of opening the flood gates to a tidal wave of Chinese and Indian immigrants?)

The point of the editorial is to argue the merits of giving illegals a sort of “premanent noncitizen resident” status instead of a more difficult “path to citizenship.”

But that’s not the point of this post. What caught my eye is found near the beginning of this piece, a relatively new justification for growing our population:

“But first, it is important to understand why the immigration issue is gaining momentum. Back in 2011, J.P. Morgan released a report that found that U.S. households own $70 trillion in physical and financial assets. This same report found that America’s stock of human capital, i.e., the collective education and experience of all U.S. workers, amounted to $700 trillion. Rather than pouring hundreds of billions of dollars into new roads, bridges and housing units, the surest and cheapest strategy for increasing our collective wealth is to import talented workers.”

So J.P. Morgan (one of our nation’s “too big to fail” banks) is saying that each American is actually worth ten times the amount of tangible financial and physical assets they’ve managed to accumulate. Sure, a tiny fraction of this can actually be measured in terms of the money that’s been spent on their education. But the vast majority of this intangible “wealth” is obviously arrived at by assigning some dubious value to Americans’ “experiences.”

If this were true – that each of us is far more valuable to society than our net worth indicates – then why is no one willing to pay for it? U.S. households’ net worth of $70 trillion works out to about $500,000 per household, a figure that’s about four times as much as the median net worth, giving you some idea of just how much wealth is concentrated in the hands of the top one percent. But never mind that; let’s say that your net worth is about $500,000. J.P. Morgan’s report says that your real value to society is about $5 million.

So why isn’t Canada offering each American $5 million to move there? Or even $1 million? I’d happily move there for that much. Or, for that matter, why isn’t any country making such an offer?

Why aren’t there corporate “breeding farms” where women can choose to be treated like animal breeding stock in return for being paid millions for each baby they produce? A repugnant idea, to be sure but, no doubt, there’d be no shortage of women willing to sign up.

Even if the J.P. Morgan report is correct – that people’s education and experience is worth ten times as much as their net worth – shouldn’t the real conclusion be that money spent on education and experience is largely squandered – that people shouldn’t bother with attaining an education because wages are too low to justify it? If the 20 million unemployed Americans are worth so much, why is no one willing to hire them? And why spend good money on an education, only to join their ranks?

The conclusion of this report is blatantly false, yet immigration advocates – those who stand to profit from growing our population – use it to their advantage. As is true with any such study, one must consider the motivation of those who have funded or produced it. What is J.P. Morgan’s real motivation for so blatantly over-valuing our collective education and experience? It’s not the supposed $700 trillion in intangible value to the economy that they’re interested in. Rather, like any other bank, it’s the $70 trillion in real assets that they’re after, and they’d like to see that figure grow with the population.

In 1976, the U.S. population was 218 million and the median family net worth was $113, 000 (in 2010 dollars). In 2010, the population had grown by nearly 50% to 309 million, yet the median family net worth had fallen to $77,300. But over the same time frame the average net worth rose from $184,000 to $499,000. So, during that time frame, while the median American was worse off, the collective net worth (the amount that banks are involved in managing) rose dramatically from about $20 trillion to $70 trillion. In other words, while the population grew, most Americans grew poorer while the banks grew much richer, especially as the top few percent of people grew much, much richer – profiting from the growth in the economy.

But the poverty-inducing effect of worsening overpopulation is reaching higher into the ranks of top few percent. From 2004 to 2010, even the average net worth declined. That’s because of the Great Recession in 2008 and the plunge in home and stock market values, one might claim. True, but was that contraction an anomaly or the bursting of a bubble built on debt to maintain an illusion of prosperity? I’d contend it was the latter.

To put it in simpler terms, banks – like all other corporations – profit from a growing macroeconomy that accompanies population growth. But, because of the worsening unemployment and poverty that that growth brings, the fortune of average citizens gets worse. But, if the banks can convince you and your elected representatives that growing the population faster – and liberalizing immigration is a good way to do it – is in your best interest (as it most certainly is theirs), then so much the better for them.